As expected, the subsidiary that owns the Perry Nuclear Power Plant and the Davis-Besse Nuclear Power Station has filed for bankruptcy.
FirstEnergy Solutions and FirstEnergy Nuclear Operating Company filed for Chapter 11 bankruptcy very late March 31. The announcement comes just days after the company said it would close its three nuclear power plants — two in Ohio and one in Western Pennsylvania — over the course of the next three years. The North Perry plant is slated to be decommissioned in 2021, and Davis-Besse in 2020.
“Given the prospective timing of federal and state review and our ongoing cash needs and debt service obligations, the FES and FENOC Boards of Directors determined that the Chapter 11 filing represents our best path forward as we continue to pursue opportunities for restructuring, asset sales and legislative and regulatory relief. We believe that this decision will best serve our customers, employees and business partners,” FirstEnergy Solutions President Donald R. Schneider said in a statement.
In a news release, the company said it expects the “Chapter 11 process will enable them to improve the viability of their operations. FES will also continue seeking legislative and regulatory relief at the state and federal level.”
The filing was made with the U.S. Bankruptcy Court in the Northern District of Ohio in Akron.
Lake County officials have been bracing for the announcement. Lake County Commissioner Jerry Cirino said after the announcement of the planned decommissioning of the plants that they are entering the second phase of efforts to save the Perry plant, which employs more than 700 people.
The Perry School District is the biggest beneficiary of the plant’s tax revenues, but Rep. Dave Joyce’s Chief of Staff Dino DiSanto has said the plant’s closure could blow “an economic hole” that would be felt by the entire county.
“My thought is we would then sit down with the bankruptcy court — once we know to whom it’s assigned — how the bankruptcy court is intending to address the issue of what to do with the assets, all of the assets, but we’re particularly interested in Perry, of course,” Cirino said in an interview March 29.
Lake County Commissioner Daniel P. Troy said March 29 he’s hopeful there’s still some relief coming from the federal level.
“I don’t see much happening in Columbus, although as I said at the (Save the Perry Nuclear Plant rally in February), you’ve got a new governor coming in,” Troy said. “This is time to get into the heads of whoever the major candidates for governor are, and we’ll know that on May 9 and make sure they make some sort of commitment to at least assist and reduce the overall pain that may take place here.”
Troy added if the plants do stay open, the tax value will drop considerably.
On March 29, FirstEnergy Solutions filed an application with U.S. Secretary of Energy Rick Perry seeking an emergency order directing regional power grid manager PJM Interconnection to secure the long-term capacity of certain nuclear and coal-fired plants in the region — including FES plants — to compensate their owners “for the full benefits they provide to energy markets and the public at large, including fuel security and diversity.”
PJM, however, has said that an emergency declaration is not needed. PJM is expected to do a formal analysis of the grid impact the FirstEnergy Solutions closings will have. If that analysis shows the closings will impact the grid as FirstEnergy Solutions says it will, then PJM could decide to join in its request.
“PJM therefore respectfully requests that the Secretary allow PJM’s (Federal Energy Regulatory Commission)-accepted process to unfold in an orderly manner and refrain from taking unnecessary, extraordinary and precedential immediate action as sought by FES,” a letter from PJM to the Energy Secretary stated.
In an April 1 Facebook post, Cirino said the feds “seem to be balking at a solution, we are going to redouble our efforts in Columbus and we need all hands on board.”
So far state efforts to subsidize the two nuclear plants that have struggled to compete with the natural gas boom have been met with little traction.
State Sen. John Eklund, R-Munson Township, is a sponsor of the Ohio Senate’s version of the legislation. He said following the announcement of the schedule plant closures that he will “redouble his efforts” to get subsidies for the plants.
“The economic impact to Ohio of these plants’ closing would be deep, wide and negative,” Eklund said. “We must not turn our backs on the affected communities, so many dedicated Ohio workers and their families, or the prospects for attracting more economic development to our state.”
The Perry plant is one of the country’s younger nuclear plants and was the 100th commissioned. It began commercial operation in November 1987. Its operation license is good through 2026 and is eligible for a 20-year renewal.
Public Utilities Commission of Ohio Chairman Asim Z. Haque said it will continue to ensure reliable power delivery to state residents.
“There is no reason for customers of FES — or anyone else in Ohio — to be concerned about whether or not they will have electricity,” Haque said. “They will.”